Security Bank profit drops to P1.6 billion in Q1

MANILA, Philippines — A one-time charge for deferred tax assets under the new tax reform law slashed the earnings of Security Bank Corp. by 43 percent to P1.64 billion in the first quarter from P2.89 billion in the same period last year.

The bank said the passage of Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act triggered a one-time P1.2-billion charge for deferred tax assets.

Without the one-time charge, the bank’s profit would have jumped by 42 percent to P3.32 billion from January to March compared to P2.33 billion in the same period last year.

Security Bank president and chief executive officer Sanjiv Vohra said the bank’s focus on clients remains steadfast.

“We are hopeful that progress on vaccination in the coming quarters will help the country resume its growth trajectory. We are fortunate that our strong capital equips the bank to support clients directly through loans and indirectly through significant investments in both our team and our technology to improve customer experience,” Vohra said.

Aside from the one-time charge, the bank’s net interest income declined by 17.7 percent to P6.65 billion in the first quarter from P8.08 percent in the same quarter last year.

This translated to a 33.5 percent drop in total operating income to P8.78 billion from P13.12 billion. Its gains from trading and investment securities plunged by 44.4 percent to P689.12 million from P1.24 billion, while foreign exchange transactions booked a net loss of P287.83 million from a net gain of P274.18 million.

Security Bank’s total operating expenses was cut by almost half to P5.46 billion from P10.88 billion as provision for loan losses plunged by 93 percent to only P401.62 million from P5.68 billion.

This translated to a non-performing loan (NPL) cover of 120 percent in end-March from 115 percent in end-December as its gross NPL ratio improved to 3.41 percent from 3.9 percent.

The bank’s loan book decreased by five percent to P450 billion due to lower retail and corporate loans, while its deposit base inched up by three percent to P519 billion.